The company was sued by the labels and movie studio last year for distributing software that allows people to share copyrighted material. 

Now the company has turned the tables on their accuses and filed a counter suit. In their Federal countersuit, Sharman claims that the record labels and film studios violated the company’s copyright by conspired to use the Kazaa network to distribute “unauthorized versions” of their free Kazaa software. An apparent move by the media companies in their fight against illegal file trading. (perhaps the programs were altered in someway that favors the media companies?)

The countersuit also reopens antitrust allegations against the media companies, that had previously been dismissed by a Federal judge. The antitrust claims stem from the media companies allegedly barring Sharman and a partner company, Altnet, from using the Kazaa network to distribute legal copies of music and film.  

Sharman alleges that the film and music companies are working together to put them out of business, so that they can “monopolize” online digital distribution on music and films

The "monopolistic purpose of this conspiratorial conduct is to drive distributors of content using peer-to-peer platforms out of business," Sharman's suit alleges. The copyright holders' "purpose is to limit the means for future digital distribution of either music or major theatrical works in a way that the (studios and record labels) can in the future more directly control the relevant markets."

Sharman also claims that their eventual goal was to move users of Kazaa away from the sharing of illegal material and instead have them take advantage of the legal material distributed through Kazaa by their partner’s Altnet. 

Here it is in legalese; "By relegating non-(copy protected) files to a subordinate and comparatively unattractive access location...Sharman intended to promote and encourage only business appropriate file sharing and to share the net payments for (copy protected) works lawfully exchanged by users of the (Kazaa) software with Altnet," the suit says. 

Sharman’s suit claims that there were talks with executives at the several major music companies about using Altnet for legal distribution. The suit names executives from Universal Music, Warner Brothers Records, Warner Music and Interscope Music that they claim showed an interest in testing the Altnet-Sharman service but then dropped out after being advised by either their lawyers or other unnamed individuals to stop all communications with Altnet. 

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